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Midterm

midterm review.docx

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Department
Law and Business
Course
LAW 603
Professor
Else Grech
Semester
Winter

Description
Law class midterm 20 multiple choice and 2 essay questions short answer total of 35 marks 15/35 of short answer. 2 hours to avoid people walking in and out we will start 6:45. Started with business org, sole is simpliest but has unlimited personal liability, you cant be a employee because u cant write contract to yourself, you can hire employees but your responsible personally on their actions, income is same as personal taxes. Partnership 2 or more people agreeing on doing business with profit. This will be on the midterm. Risk is unlimited personal liability, even if 1% rd partner he is liable to the third party 100% they can sue the other partner but 3 parties are protected. Sharing losses and profits, assets, taxes, control who has what say in the business, ment to protect third parties. General rule of partnership each partner must act in good faith fiduciary duty. One partner signs in breach of fiduciary duty contract is still binding because its to protcect third parties. Partnersip agreement will protect you so if someone violates that you have oppertuinity to sue. Its easier to prove breach of partnership agreement over breach of fiduciary duty. Limit the assets to your name to protect yourself. Theres no absolute protection. Limited liability partnerships apply to lawyers and accountants. All 4 partners have to agree to kick one out. One partner can terminate the partnership with dissolution you have to payy of debts and everything if he is a minority partner he dies or anything it dissolves. How do u start a limited partnership. You need at least 1 general partner who has unlimited liability and one tht has only what he invested you have to go through a formal process much different then a sole and a general partnership. The limited partner is limited to the money they invested unless they act in a way that they are the controlling mind of the general partner. Although they can work for the general partner but cant be the key decision maker. To protect third parties they get a discloser right in the title of the partnership shows it’s a limited partnership. Why would u invest in limited partner because it’s a tax advantage. If your 50% limited partner owner and u invested 50,000 and bus lost 100,000 u get to write off 100,00 off your personal taxes. Most common is corp, shareholder is owner, can be employee, corp continues to go on, if they die their shares are transferred. Their risk is whatever they put in. if the money is gone they cant be attacted for anything. Corporations are funded through equity and debt. Corps is easier to get debts than a partnership because its its own entity. You can sell more shares to get equity, shareholders gain money from that through capital gains and dividends. It is taxed at a corporate level and at the personal level. Shareholders have right to vote, right to receive a dividend and right to recive money when business dissolves after preferred shareholders. The main players are shareholders, directors, officers…. Shareholders get to elect directors, vote on proposals, get auditor,….. directors give long term business objectives and elec
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